A woman was taken to hospital and several homes and vehicles were badly damaged when a 4.5-million litre water tank on Cooma's North Ridge ruptured on Saturday night.
Streets and homes were flooded when the tank, one of two major storage tanks which provide part of the town's water supply, burst shortly after 9.15pm.
A car was swept 800 metres down the road into a truck, police said, with other vehicles also damaged.
The NSW RFS reported that the rupture sent water flooding down Moorong Place, and residents have reported water flowing through their homes.
A council engineer attended the site and managed to isolate the second storage tank, which will continue to provide the town with drinking water.
Police and council officers are checking damage to buildings.
